Legal Question in Business Law in California

If a former employer in California owes me money (more than $10,000 in unpaid wages, commissions, and fees) for a business that is now closed, can I claim part ownership of their new business? Especially if they are paying for the new business startup with the money they owe me? I'd like to know so I can determine if I can sell any potential "interest" in the new business that I may have legal claim to and recoup my earnings.


Asked on 4/04/12, 11:57 am

5 Answers from Attorneys

Roy Kohler Law Offices of Roy Kohler

Possibly. You may be able to assign whatever rights you may have to a buyer.

It might be better to first bring an action against the alleged wrongdoer and get an award or judgment if you win.

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Answered on 4/04/12, 12:43 pm
Shawn Jackson The Jackson Law Firm, P.C.

The firs thing you want to do is to contact the Labor Commissioner in your area and have that initial conversation about the prosecution of the matter. Then, you may also want to select an attorney of your choice and have that free initial 30 minute consultation with him or her. Let us know if you have any questions or concerns.

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Answered on 4/04/12, 1:09 pm
Anthony Roach Law Office of Anthony A. Roach

You would have to file a lawsuit first. There is no lien for unpaid wages recognized in California, but you have the option of either having the Labor Commissioner go after them, or file a lawsuit and get a judgment. You would then have to collect on that judgment.

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Answered on 4/04/12, 1:12 pm
Terry A. Nelson Nelson & Lawless

If and when you successfully obtain a money judgment against the original company, from the Labor Commissioner or a private lawsuit, then you can determine whether you will be able to pursue it against any person or entity other than the original company. Probably not, unless you can trace business assets that improperly / illegally diverted to the new company. I wouldn't hold my breath on being able to prove that it they 'properly' closed the old company. .

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Answered on 4/04/12, 11:36 pm
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

I have read, and don't disagree with, the preceding answers. However, I believe you've left out a couple of important facts. First, what was the form of the business you worked for? Was it a proprietorship, partnership, corporation, limited liability company, or something else? How did it go out of business -- a formal bankruptcy, a proper dissolution and winding up process, or did it just fade into the woodwork? Did the owners get paid before the creditors? Is it still in business at all? Can the new business be deemed a successor to or reorganization of the old business, or are they truly (legally) separate and distinct, even though the ownership overlaps?

Under California's business laws, there are proper and improper ways to shut down a failed business. Some of them impose liability on the old owners, some don't.

I consider it very unlikely that you can pursue your remedies as you suggest in your question, but somewhat more likely that there may be other effective avenues to get paid. However, I can't tell without a fair amount of details as to exactly what happened here.

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Answered on 4/05/12, 10:49 am


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